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Rampant inflation has sparked a record decline in consumer confidence, with the pent-up demand in discretionary spending following the end of lockdown disappearing as the cost of living soars, according to a new survey.

Sentiment among consumers hit lows not seen since the start of the pandemic, falling to -20 on the index tracked by accountancy firm PwC.

It compares to +8 a year ago as shoppers splashed out on leisure activities, hospitality and fashion following the easing of lockdown restrictions.

The dramatic decline from the peak of +10 last summer is the biggest sustained decline recorded by PwC since the global financial crisis in 2008 and the latest reading is only a few points behind the -26 recorded at the start of the pandemic.

PwC surveyed more than 2,000 people across the weekend of 17 and 20 March and found confidence has fallen across almost every demographic group as consumers tighten belts and prepare to spend less on eating out, buying clothes and going on holiday.

Three-quarters said they had seen their grocery shopping become more expensive in the past few months, and 78% expected prices would rise further in the coming months.

Grocery is now the only category with a net positive spending intention; almost exclusively a result of inflation expectations.

Lisa Hooker, leader of industry for consumer markets at PwC UK, said: “This shift in sentiment is both significant and sudden, with consumer spending expectations moving towards more essential areas at the expense of discretionary items.

“Businesses that help customers by offering them the options to trade down are more likely to keep their loyalty for when things get better.”

Morning update

It’s a quiet morning on the markets, with the FTSE 100 shrugging off the gloom to rise 0.2% to 7,549.87pts.

Risers in London include Deliveroo, up 2.3% to 117.4p and Ocado, up 0.4% to 1,185,5p.

In Europe, Delivery Hero has shot up 12.4% to €47.16, Beiersdorf is up 1.4% to €96.12, and HelloFresh is up 1% to €42.70.

Early losers include Pernod Ricard, down 0.4% to €198.50, Heineken, down 0.2% to €85.92, and Casino, down 0.2% to 416.57.

This week in the City

It is looking fairly quiet for company updates this week.

Tomorrow kicks off with the latest monthly grocery figures from Nielsen .

Meat supplier Hilton Foods reports full-year results on Wednesday.

And in the US, Constellation Brands issues a quarterly update in Thursday.